"Informal" interest

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Icarium

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What are the tax requirements when you earn interest from an informal source? I made a personal loan to an acquaintance a while ago on which I'm charging them interest (and they're paying regularly), and while it's nowhere near enough to put me over the interest exemption - what if it was?

There's no formal contract and she's obviously not going to be issuing any tax certificates, so how would I declare this on my tax return?
 
You don't - simple.

As you are not a registered financial service provider you would probably get a fine or serve jail time if you told them.
 
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You only need to register as a credit provider if you have either over 100 credit agreements, or a loan book of R500k plus. So thanks, but that's not the correct answer...
 
Firstly, interest received is interest received. Whether formal or informal.

Interest received is an income and should be declared as such. Legally you are obliged to declare the interest you've received. SARS will tax you on the interest should it be over the allowance they give each year.

If you do not declare it then you can be charged with tax evasion if caught. I know its a family member but what if that family member gets creative with their taxes and try and deduct the interest paid on their side?

Also, most on here do pay their dues. Asking whether you should pay yours........:(
 
I wasn't asking whether I should, I was asking how you declare it when the person paying you interest isn't going to issue you with a corroborating tax certificate...
 
Icarium said:
I wasn't asking whether I should, I was asking how you declare it when the person paying you interest isn't going to issue you with a corroborating tax certificate...
Click to expand...

My apologies, reread your post and my mistake. Sorry for jumping the gun on that one and for my comment.
 
when you start with your tax return and you complete the "wizard" you will see the interest part of the form. click "yes" that you have received interest for the year. the form will create the interest section for you to complete.
 
Just like any other. Declare it & claim interest deduction.

>>what if it was?

You'd pay tax on it.
 
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